Only the Rich Need Apply? A Dynamic Model of Index-Based Insurance Choice
| dc.creator | Farrin, Katie | |
| dc.date | 2017-04-01T19:19:35Z | |
| dc.date.accessioned | 2026-07-09T06:07:09Z | |
| dc.description | I present a dynamic expected utility model to explain farmers’ borrowing decisions and observed low demand for index-based agricultural insurance. Results indicate that, in the absence of insurance, only low- and medium-wealth households access credit for farming and consumption. Once insurance contracts become available, however, cases exist in which borrowing initially declines with wealth until a critical wealth level is reached, after which wealthier households take out loans in order to purchase insurance. Implications of simulations suggest that index-based products may not be tailored for the ultra-poor, who must borrow the maximum amount simply to meet consumption needs. As such, researchers piloting index-based insurance programs must seriously consider the effects of liquidity constraints on contract uptake. | |
| dc.identifier | doi:10.22004/ag.econ.124679 | |
| dc.identifier | https://ageconsearch.umn.edu/record/124679/files/FarrinRev.pdf | |
| dc.identifier | http://ageconsearch.umn.edu/record/124679 | |
| dc.identifier.uri | http://hdl.handle.net/123456789/572583 | |
| dc.language | eng | |
| dc.publisher | ||
| dc.source | http://ageconsearch.umn.edu/record/124679 | |
| dc.title | Only the Rich Need Apply? A Dynamic Model of Index-Based Insurance Choice | |
| dc.type | Text |